finance formulas

four profitability ratios

gross profit margin
mark up
net profit margin
return on capital employed

ratio: gross profit margin

gross profit/revenue x 100

ratio: markup

gross profit/cost of sales x 100

ratio net profit margin

net profit/ revenue x 100

interfirm

between different firms, for example, comparing the performance of two different house builders

intrafirm

within the firm, for example, comparing this year's results with last year's, or the performance of the Leicester branch of a retail store.

Stakeholder

anyone with an interest in the activities of a business, whether directly or indirectly involved.

return on capital employed ROCE

net profit before interest and tax/ capital employed x 100

measuring liquidity

liquidity ratio measures how solvent a business is

Types of liquidity ratio

current ratio
acid test ratio/ liquidity ratio (liquid cap)

current ratio

current assets/ current liabilities